Natural Gas Gains for Second Day on Forecasts for Cold Northeast

Natural gas futures climbed for a second day in New York on forecasts for below-normal temperatures that would stoke demand for the heating fuel in the Northeast.

The weather may be colder than usual in New England and the mid-Atlantic through April 1, according to MDA Weather Services in Gaithersburg, Maryland. The low in New York on March 22 may be 28 degrees Fahrenheit (minus 2 Celsius), 9 less than average, data from AccuWeather Inc. show.

“We could still get another cold push,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “Winter’s last gasp is sparking a rally, but the outlook is bleak for the bulls after this.”

Natural gas for April delivery rose 6.5 cents, or 2.3 percent, to settle at $2.92 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 27 percent above the 100-day average at 2:59 p.m. Prices have climbed 6.8 percent this month.

The low in Boston on March 22 may be 18 degrees Fahrenheit, 15 less than usual, according to AccuWeather in State College, Pennsylvania.

In terms of natural gas-weighted heating degree days, February was the coldest across the lower 48 states since 1979, according to Commodity Weather Group LLC in Bethesda, Maryland.

About 49 percent of U.S. households use gas for heating, Energy Information Administration data show. The agency is the energy department’s statistical arm.

Stronger Demand

Gas demand in the U.S. may climb 3.1 percent this year to average 75.74 billion cubic feet a day, driven by power plants and industrial users, the EIA said March 10 in its monthly Short-Term Energy Outlook report. Production may rise 5 percent to average a record 78.39 billion cubic feet a day.

EIA data scheduled for release on Thursday may show gas inventories dropped by 51 billion cubic feet last week, based on the median of 17 analyst estimates compiled by Bloomberg. The five-year average decline is 45 billion for the period.

Natural gas prices may average $2.85 per million British thermal units this year, Breanne Dougherty, an analyst at Societe Generale SA in New York, said in a note to clients Wednesday.

“While winter 14/15 trounced the core demand loads of the record set last winter, the strength of the supply-side of the ledger continues to support the state of structural oversupply,” Dougherty said.

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